On Wednesday, Dan Boyd of the Albuquerque Journal reported on projected revenue growth in New Mexico. Lawmakers will have access to $2.5 billion in “new” money.
Inflation-related consumer spending and increased oil production are the prime drivers behind the financial windfall, but the real question is: How do we spend this money most effectively?
Tax reform should be high on the priority list. New Mexico is one of the few states that has property tax, sales tax, and personal income tax. According to the United States Census Bureau, in 2021 New Mexico collected over $7.4 billion in total tax revenue, including $1.3 billion in income tax and $3.8 billion in gross receipts tax.
With over 2 million residents, using a portion of that budget surplus to eliminate the personal income tax could see a return of over $600 per resident and still have $1.2 billion leftover.
The 2022 Kids Count report ranks the economic well being of children in New Mexico at 48th of 50 states. Returning money to families would be a smart play. Similarly, New Mexico ranks 50th in education in the same report, highlighting a need to rethink the state’s approach to education.
On the education front, there are 316,785 students enrolled at public elementary and secondary schools as of fall 2021, representing a reduction of 4.3% in total enrollment since 2019. Instead of eliminating personal income tax, New Mexico could duplicate the Arizona school choice program and equip public school families with $6,000 per student and still have $600 million leftover from that new money.
Budget surpluses in recent years are in large part thanks to New Mexico’s resilient oil and gas industry. Gas production increased over 13% in 2021 over 2020, while oil production increased over 20%. The industry accounted for 18% of total state spending in fiscal year 2020.
Republican gubernatorial candidate Mark Ronchetti proposed annual oil and gas rebates for New Mexicans.
“Our oil and gas industry is a major contributor to our economy and every New Mexican should share in that benefit,” says Ronchetti. “State government has never been richer, but does your family feel that? I’m betting you don’t, and there’s no excuse for that. There’s a clear choice between out-of-control government spending, or returning money to New Mexico families who can truly use it.”
When New Mexico’s oil and gas producers do well, so do the people of the state. Will state lawmakers return those good fortunes to the people in the form of education freedom or tax reduction?